S4 Capital reported a net revenue gain of 28.1% in the first quarter to 219.1 million GBP (about $274 million) with organic growth of 6.8%. 

The Martin Sorrell-led firm said it was sticking to its full-year guidance of organic growth in the 8%-to-12% range. Sorrell indicated that the firm expects sequential growth improvement by quarter through the rest of the year.  

“While net revenue growth was at the lower end of our full year guidance range, it was in line with our expectations,” the company said. 

On a conference call with analysts, company executives noted some slowing of the general market with “elongated sales cycles,” due in part to marketers being late with finalizing 2023 marketing budgets.  

The firm also felt some impact from one of its clients—Mondelez—dropping out of the so-called “whopper” category, which it defines as clients spending $20 million or more on services provided by the company. 

Executive Chairman Sorrell said the firm is off to a “solid start” in 2023 and stressed that not all clients are cutting back.  

By region, the Americas was the strongest performer, posting growth of nearly 11% in Q1. Europe, Middle East & Africa and Asia Pacific were both in negative territory, down 4.7% and 10.9% respectively. 

The company trimmed its staff in Q1 by 200 positions to 8,700. CFO Mary Basterfield said the company would continue to keep a tight rein on costs and head count. “It may rise slightly on the back half” of the year, she said, based on current performance projections.  

“We remain cautiously optimistic for the rest of the year,” said Sorrell. “Technology clients continue to maintain their marketing investment, with AI and AGI being new opportunities for exploration and we are opening up further significant land & expand relationships in packaged goods, financial services and technology.”